STUDY REPORT

ON
NEPAL TELECOM

Submitted by:

Under the guidance of

Faculty Lecturer, School of Law

STUDENT'S DECLARATION
I hereby solemnly affirm, declare and state that this study about Nepal Telecom is a
bonafide record of the Financial Management study done by me under the guidance
and supervision of Mr. ……, faculty lecturer.
This work has been done with due diligence and sincerity to gather the most accurate
data and information.
This project has been a wholesome learning experience for me and I would be glad to
extend the learning process by welcoming criticism and suggestion on my work.
This is my original work and has not been submitted in any other similar titles.

ACKNOWLEDGEMENTS
With immense please I am presenting “Financial Management” project report as part of
the curriculum of ‘BBM LLB’.I wish to thank all the people who gave me unending
support.
My deepest thanks to, Faculty Lecturer, for his valuable support, guidance, timely
advice and words of encouragement given towards the preparation of this report. I am
grateful to him for nurturing a competitive environment in the class which motivates all
students to work in the best of their abilities.
My hearty and inevitable thanks to all the respondents who have helped me to bring
out the project in a successful manner.
Last but not the least; gratitude goes to all my friends and batch mates who extend
their wholehearted and helped directly or indirectly to complete this project report.
Thanking you,
Table of Contents
INTRODUCTION ............................................................................................................. 4
Introduction of the study ............................................................................................... 4
Scope of the study ....................................................................................................... 4
Objective of the study .................................................................................................. 4
Research methodology ................................................................................................ 4
Source of data collection: ............................................................................................. 5
Limitation...................................................................................................................... 5
Organization Profile ......................................................................................................... 6
Brief Company Background ......................................................................................... 6
Mission of NTC ............................................................................................................ 6
Vision of NTC ............................................................................................................... 6
Goal of NTC ................................................................................................................. 6
Product and services: .................................................................................................. 6
An Overview of the Financial Year 2014/15: ................................................................... 7
Market Share ............................................................................................................... 7
Financial Achievements ............................................................................................... 8
Revenue and Net Profit after Tax............................................................................... 10
Expenditure Analysis: ................................................................................................ 10
Earning Per Share (EPS) & Book Value of Share: ..................................................... 11
Future Programs: ....................................................................................................... 11
Conclusion and Recommendation: ............................................................................... 12
Conclusion: ................................................................................................................ 12
Recommendations: .................................................................................................... 13
 INTRODUCTION
Introduction of the study
As a part of BBM/LLB curriculum, I have to carry on a project in an organization, which
will provide a practical exposure in financial management field. This was a great
opportunity for me to get detailed knowledge about the financial aspects of the
organization.
Financial management means procurement of funds at minimum costs and effective
utilization in order to maximize the wealth of shareholders. The term of financial
management refers to its relationship with the closely-related fields of economics and
accounting, its functions, scope and objectives. Financial management, as an integral
part of overall management, is not a totally, independent area. It draws heavily on
related disciplines and fields of study, such as economics, accounting, marketing,
production and quantitative methods.
Scope of the study
This project report is based on the study held about Nepal Telecom. Each and every
activities of the company is studies to the extent it was possible. I have made a full
attempt to have a SWOT analysis of the study. To draw a broader conclusion on the
study, I as the researcher has gone for an intensive study on the areas of financial
management in the company. The key points of my research study are:
1. To Understand and analyze various prevailing Financial Management factors of
the organization.
2. To suggest any measures/recommendations for the improvement of the Financial
Management procedures.

Objective of the study

The main objective is to assess the strengths and weakness of Nepal Telecom.
The specific objectives are:

1. To analyze the contribution of Nepal Telecom in total revenue of government of Nepal

as a largest tax payer of a nation.
2. To examine financial position of the company.

Research methodology

The first step in preparation of this report is to design the framework of the research.
The task begins with the collection of necessary data and information concerning the
study. The data and information collected has been studied carefully and presented
them systematically and get them analyzed so as to meet the objective of the report. All
data provided has been thoroughly studied and then search design was planned.

Source of data collection:

Data are collected only from secondary sources of the organization. The data were
collected from various booklets, pamphlets, magazines and websites.

Limitation

1) An in-depth study of the company couldn’t be carried due to shortage of time.

2) As it was my first financial study of an organization, I did my best but still I was
unable to cover all financial information.
3) I was unable to collect data from primary source by direct observation interview
and discussion with managers of NTC.
4) Information are extracted from the website, magazines so that data may not be
accurate and updated.

In spite of all such above limitations I have tried my best to come out with an objective
and bias free project report on important aspect of financial management of Nepal
Telecom.
Organization Profile
Brief Company Background
Nepal Doorsanchar Company Limited, known as Nepal Telecom (NTC) was registered
on 22th Magh 2060 under Company Act 2053 and the notice to this effect was
published in Nepal Gazette on 26th Chaitra 2060, after dissolving then Nepal
Telecommunication Corporation. However, the company name was officially effective
from 1st Baisakh 2061 and the general public knows it by the name of NEPAL
TELECOM and its registered trademark. The company with its long history is on the
way of customer service and nation building. Nepal Telecom is state owned
telecommunication service provider in Nepal. The central office of Nepal Telecom is
located at Bhadrakali Plaza, Kathmandu. It has branches, exchanges and other offices
in 184 locations within the country.

Converting NT from government owned Monopoly Company to private owned, business

oriented, customer focused company in a competitive environment, Nepal Telecom
invites its all-probable shareholders in the sacred work of nation building.

Mission of NTC
“Nepal Telecom, as a progressive, customer spirited and consumer responsive entity, is
committed to provide nation-wide reliable telecommunication services to serve as an
impetus to the social, political and economic development of the country.”
Vision of NTC
“NT vision is to remain a market leader in information and technology sector in the
country while also extending reliable and cost effective services to all.”
Goal of NTC
“NT goal is to provide cost effective telecommunication services to every nook and
corner of the country.”
Product and services:
Nepal Telecom is the key market player as it holds about 60.30% of totals no. mobile
phones and 91 % of total no of Fixed Telephones. (NTC-MIS-2067, Aswin). It has 221
Public Switch Telephone Network exchanges in 72 districts and has covered all 2915
VDC with Basic Telephone service. It offers various products like Basic telephone,
Mobile telephone, Internet, ISDN, PSTN, Leased line, CDMA phone, sky data card, etc.
It has starred SIP telephony service for the Nepalese lying beyond the country to call
Nepal from round the world in its own tariff through internet. This organization has a
capital of about 150 billion. Each share worth Rs.100 and therefore in total 1.5 billion of
shares. The half of the capital is shared by the Ministry Of Information and
Communication. The rest being shared by Ministry Of Finance, Civilians and rest by the
shareholders. However, not all the shares are freely available to be sold in the open
market.

An Overview of the Financial Year 2014/15:

The company has 7.85 million data subscribers using GPRS, EDGE or WCDMA. Apart
from this, NT also provides dial-up, ADSL, CDMA 1X, EVDO and WiMAX internet
services.

Market Share
The subscriber base of the company at the end of previous financial year was 10.9
million but in the current financial year 2014/15 it has increased by 19.05 percent to
12.9 million. Similarly, internet subscriber base at the end of previous financial year was
4.7 million but in the current financial year 2014/15, this has increased by 38.34 percent
to 6.5 million. Company has considered this increment commendable and committed to
provide effective services in future. The market shares of the company in voice
telephone have increased from 44.4 percent to 46.19 percent and Internet/Data market
from 53.51 percent to 56.26 percent in financial year 2014/15. This reflects the
improvement in quality and reliability of services provided by the company.
Various technologies based internet subscriber of the company at the end of the
financial year 2014/15 are as follows:
Total internet users of the company of last five years are as follows:

The telephone lines based on various technologies of the company for the last five
years are as follows:
Financial Achievements
The Company has expected NPR 45.45 billion revenue in financial year 2015/16.
During the period of six month, the company is able to earn NPR 21.29 billion, which is
46.85 percent of expected revenue. Net profit after tax of the company for the six
months is NPR 7.25 billion. Revenue and net profit of the company for the six months
have increased by 6.95 percent and 9.15 percent respectively compared to same period
of last financial year 2014/15. Since various projects initiated by the company are in full
swing for its completion, the company is confident enough that the target will be
achieved above par.
Financial Analysis:
Despite the challenging business environment in terms of increase in competition and
operating expenses, Nepal Telecom managed to record a noteworthy growth in
performance during F.Y. 2014/15. The performance of the company has improved
substantially in last 5 years. The financial progress highlights for F.Y. 2014/15 along
with that of last 4 years is given in the table below:
From the above analytical table, it can be seen that,
Liquidity ratio has increased from 3.55 times in F.Y. 2013/14 to 3.94 times in F.Y.
2014/15. This indicates that the company is comfortable with its present liquidity
position and foreseeable liquidity needs. It has adequate facilities in place and robust
cash flows to meet its liquidity requirements for executing its business plans and
meeting with any evolving requirements.
The book value per share of the company has increased by 8.27 percent. This indicates
that the safety associated with each individual share after all debts are paid accordingly
have been cushioned further.
The Earning per Share has also increased from 77.12 in F.Y. 2013/14 to 97.04 in F.Y.
2014/15. This indicates that the shareholders of the company are earning more money
from the company.
Revenue and Net Profit after Tax
In F.Y. 2014/15, company has been successful in earning revenue of NPR 42.64 billion
with a net profit of NPR 14.56 billion. In comparison with previous financial year, F.Y.
2013/14, the operating revenue for F.Y. 2014/15 has increased by 10.40 percent. The
net profit ratio in F.Y. 2013/14 was 29.16 percent and in F.Y. 2014/15 is 34.14 percent.

Contribution to GDP and Government Revenue

The company has been a major contributor to Country’s GDP in Service Sector as
shown by the table above. The company has contributed 11.46 percent to Country’s
GDP in Service Sector in current financial year. This indicates that the company has
been playing a vital role in GDP growth of the country.
The company has also made an important contribution to Government Revenue in
current year as well as in previous years. The company has made a contribution of 5.27
percent to Government Revenue in current year.
Expenditure Analysis:
The total expenditure for F.Y. 2014/15 is Rs.22.62 billion which is 6.66 percent less than
that of previous financial year. The Personnel Cost (including bonus and telecom
allowance) has increased by 11.59 percent with respect to previous year, due to various
employees being promoted and increment in grades as well. The Administrative
Expenses have increased by 7.19 percent with respect to previous year. Personal
Expenditure (including bonus and telecom allowance) and Maintenance & Operation
Expenditure comprise major portion of Total Expenditure with 26.44 percent and 35.26
percent respectively.
The chart of total expenses is as follows:

Earning Per Share (EPS) & Book Value of Share:

Earning per Share for F.Y. 2014/15 has been Rs.97.04 and Earning per Share for F.Y.
2013/14 was Rs.77.12. The increase in net profit in current year by 25.83 percent with
respect to previous year has contributed to increase in Earning Per Share. With respect
to Book Value of Share, there has been increment by 8.27 percent, Book value per
share for F.Y. 2014/15 and 2013/14 being Rs.498.72 and Rs.539.99 respectively.
Future Programs:
The company has set an important goal of preserving our shareholders’ long term
interest by making our company trustworthy and credible institution. The company has
planned to fulfill requirement of customers by providing new technology based telecom
service at affordable cost.
1) Considering the fact that the big share of population of rural areas is outside the
purview of the telecom system, the company has planned to expand its network
in rural areas. The company shall work rigorously to improve its service quality
and shall focus on wireless/wire line broadband data service.
2) Nepal Telecom is further dedicated to provide best services to every nook and
corner of the nation at affordable rates for which the company has an excellent
man power to form and implement necessary plans and programs.
3) The company has planned to distribute around 2.26 million telephone lines in the
financial year 2015/16. Considering the need of the customer, new and modern
value added services will be provided and network will be expanded by installing
new BTS.
4) In the financial year 2015/16, the company has targeted to increase its wireless
mobile subscriber by around 2.23 million.
5) In order to facilitate the rural areas of Nepal from the internet services, the
company plans to expand its WiMAX system based on wireless technology in
dense area as well as increase the bandwidth of ADSL service.
 6) The company has targeted to distribute around 29,000 PSTN lines through ONU
(Optical Network Unit) and Access Node in financial year 2015/16. Similarly, to
provide quality data service, the company has planned to increase the capacity
of ADSL and also outsourced the repair and maintenance service of ADSL.

Conclusion and Recommendation:

Conclusion:
Nepal Telecom, a leading company in the telecommunication sector working restlessly
for decades has been providing world class services in Nepal throughout the country
covering all the 75 districts and covering all the VDC’s. It has been providing best
services regarding telephony and internet access to the willing customers. It has
completed successful seven years of privatization. The organization is working for the
social service and has been continuing the joint venture with the traffic police and
working for the awareness in the road accidents and helping the needy during the
natural calamities. It is providing services as telephony (GSM, CDMA, PSTN, SIP PPP)
and internet as (Dial-up, ADSL,EVDO,GPRS) other entertaining services as CRBT and
free ten web sms provided. It covers about 4.5% of the national revenue and is playing
major role in the infrastructure development by revenue. It has been recognizing itself
as the largest tax payer to the government and has been leading the nation by revenue.
Being a service provider it is facing a lot of challenges. The monopoly market has no
longer existed between the organizations. The competitors are giving a heavy challenge
to them; the competitors mainly Spice Nepal working under the management of Telaia
Sonera, a famous European multinational company, United telecom (UTL), Smart
Telecom and Nepal Satellite company limited are too involved in the race. Beyond these
services it has been implementing new technologies for fulfilling the desire of the
customers.
As a conclusion the services provided to the customers are satisfactory till now but a lot
of improvement and a regular cope-up is to be made to hold the existing customers and
to attract new customers from the competitive market as well.
Recommendations:
1) Improvement in the managerial environment i.e. the circulation of the internal
commands, decisions, is very important to cope up with the environment.
2) Any organization, usually the service based should always give first priority to the
customers.
3) Customers are not properly satisfied themselves on the provided service as they
want a complete and versatile service. So Nepal telecom should always keep
flexibility of the services in majority to hold the existing customers and to attract
new customers from the competitive market.
4) The decision making and policy formulation is found to be worst in the
organization. Decisions based on the improvement and establishment of the new
technology has not been properly respected. ‘Right work in the right time’ must
always be kept in the prior consideration.
5) The current cooperation between the trade unions and management is quite
unsatisfactory. If the organization wants proper survival in the competitive
environment it should always cope-up with the workers unions.
 References
www.ntc.net.np